Implementing a business model that combines the use of a digital platform with training, skilling and business development support to build women business networks of digital financial services for UNCDF Bangladesh
To implement a business model Tech+ that combines the use of digital technologies with training, skilling and business development support to build women business networks, thus enabling women to become micro-merchants providing products and services for women, children and adolescents.
Project timeline: 13th January 2019 to 30th September 2020
Partners: UN Capital Development Fund (UNCDF)
Project objective:
To summarize, the project is signed with iSocial in collaboration with UNCDF and represented by UNDP, to support the UNCDF‘s SHIFT SAARC in Bangladesh in its mandate to promote the uptake of innovative products and sustainable business models utilizing digital technologies and Digital/Mobile Financial Services (DFS/MFS) in Bangladesh. As part of the MDDRM component, one of the key activities is to build several user cases of digital innovations at the micro merchant level. The project was designed with three major components:
- Design and operationalization of an extended digital platform for relevant players of the micro-merchant ecosystem, focusing on women micro-merchant
- Building a system for women to become micro- merchants with a reduced entry barrier
- Integration of women micro-merchants to digital supply chain and payment system
The primary objective was to launch a women-oriented micro-merchant platform that integrates all value chain partners, enabling digital transactions and fostering financial inclusion. A key aim was to develop or integrate a solution for building credit ratings for these micro-merchants, to be utilized by Fast-Moving Consumer Goods (FMCG) companies and Mobile Financial Services (MFS) providers for tailored credit limits and interest rates.
Furthermore, the project aimed to seamlessly connect FMCG companies to the platform for efficient distribution management to women micro-merchants. To ensure successful adoption, the project encompassed developing communication, distribution, digitization, and marketing strategies, alongside comprehensive training for internal staff on micro-merchant acquisition, platform usage, and KYC compliance. A crucial operational objective was the development of a field activation plan to promote the platform among female micro-merchants and establish linkages with at least one, preferably two, local/regional FMCG suppliers and financial service providers. The project also prioritized designing a robust system for tracking and monitoring progress.
In terms of onboarding, communication, and transaction services, the initial phase involved a limited rollout to a minimum of 30 micro-merchants to fine-tune functionality and financial linkages before a wider launch. This included collating field data on user performance and satisfaction and incorporating lessons learned to address technical and process issues. The full rollout aimed to onboard at least 200 women micro-merchants in at least two selected districts, with a target of at least 50% using digital payment systems for orders and payments to distributors. A critical objective for sustainability was ensuring 70% of women micro-merchants remained active users by the program’s end. Finally, ongoing technical troubleshooting and training were essential for all parties involved: women micro-merchants, FMCG companies, and financial service providers.
Locations the project served: Sirajganj & Sherpur.
Impact:
Impact on Women Micro-Merchants (WMMs) and their Communities:
- Financial Empowerment and Entrepreneurship: The project has successfully enabled rural women to become entrepreneurs, with their monthly income increasing significantly from approximately BDT 500 at the beginning to around BDT 7000 by the project’s end. This direct financial gain has provided them with greater financial independence and a pathway out of poverty.
- Enhanced Social Identity and Status: WMMs have achieved a distinct identity within their families and communities, transcending traditional gender roles. They are no longer just individuals but recognized “successful entrepreneurs” and “social changers.”
- Overcoming Social Barriers and Shifting Perceptions: The project effectively addressed initial social and mental barriers faced by rural women in pursuing entrepreneurship. It has positively impacted community perceptions, with people now accepting and even actively supporting women entrepreneurs. The society, which initially resisted women as entrepreneurs, now depends on WMMs as “most trustworthy” sources of products and services.
- Increased Community Trust and Dependence: The project has fostered a high level of trust in WMMs, making them preferred providers of doorstep and K’shop services over other established market shops. This indicates a significant shift in community dynamics and reliance on female-led businesses.
- Reduced Dependency on Male Family Members: WMMs have gained increased autonomy in managing their business and financial transactions by effectively utilizing technology (the ‘Kallyani’ app), significantly reducing their reliance on male family members.
- Technological Adoption and Digital Literacy: WMMs are becoming experienced in using technology, specifically the ‘Kallyani’ app, for daily business transactions. This adoption of digital tools enhances their digital literacy and prepares them for further engagement with digital financial services.
Impact on iSocial (Project Implementer):
- Proven Business Model: The project has validated the business model for WMMs, demonstrating its effectiveness in increasing income with growth in investment and gross margin.
- Sustainable Revenue Streams: While sales commission from K-shops was not the primary income source, the project successfully generated substantial income for iSocial from B2B services, amounting to BDT 57,770,281, with a high gross margin of 43%. This establishes a sustainable financial model for iSocial’s operations.
In essence, the project has not only achieved its core objective of creating a Women Business Network of Digital Financial Inclusion but has also catalyzed a broader socio-economic transformation in rural communities, empowering women, altering societal perceptions, and demonstrating a viable and scalable business model for digital financial inclusion.
